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A business issued a 120-day, 5% note for $60,000 to a creditor on account.

A business issued a 120-day, 5% note for $60,000 to a creditor on account. 


Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. Assume a 360-day year. Refer to the Chart of Accounts for exact wording of account titles.

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Answer #1
Ref. Account Debit Credit
a. Accounts Payable $60000
Notes Payable $60000
b. Notes Payable $60000
Interest Expense ($60000 * 5% * 120/360) $1000
Cash $61000
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